The Deputy Director of the Financial Services and the Treasury Bureau of Hong Kong, Chen Haolian, reiterated that the Hong Kong government is closely cooperating with mainland authorities to expedite the inclusion of Real Estate Investment Trusts (REITs) in the stock market interconnection. The expansion of Stock Connect aims to inject momentum into the local REIT market which suffers from liquidity shortages and undervaluation. The market anticipates that long-term capital inflows will stimulate trading in the sector, potentially triggering a revaluation. Experts believe that the high-yield nature of REITs will attract followers, but they also worry that the entry threshold may be too high, making it difficult for small and medium-sized REITs to benefit, and hindering the listing of more companies' REITs in Hong Kong. The idea of including REITs in Stock Connect can be traced back to April 19, 2024, when the China Securities Regulatory Commission announced five capital market cooperation measures with Hong Kong, specifically mentioning the inclusion of REITs in the Shanghai-Hong Kong Stock Connect. Since then, high-level officials from both sides, including the Chairman and Vice Chairman of the CSRC, as well as the Chief Executive of Hong Kong and the CEO of the Hong Kong Stock Exchange, have continuously expressed their commitment to advancing this work on important occasions. To pave the way for this inclusion, both sides have taken several substantive measures. On the tax front, Hong Kong has exempted stamp duty on the transfer of REITs shares by the end of 2024, significantly reducing trading costs. In terms of legal framework, the Hong Kong government is amending regulations to introduce statutory arrangements and mandatory acquisition mechanisms for REITs, enhancing governance transparency. In 2026, with the inclusion of Renminbi counters in Stock Connect by both sides, REITs are expected to facilitate dual-currency trading, eliminating exchange rate risks for mainland investors. Currently, both sides are preparing technically and optimizing rules for the relevant arrangements, and the implementation plan will be jointly announced as soon as it receives approval from the relevant mainland authorities. The development of the local REIT market in Hong Kong has been lackluster for over twenty years, facing serious structural challenges today. Since the listing of Link REIT (00823) in 2005, the Hong Kong REIT market has steadily grown, but its overall size has been limited, currently with only about 11 products and a total market value of about HK$150 billion, with serious liquidity shortages. Looking back at the more than ten years since the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connects opened, "Northbound flows" have become an indispensable pricing force in the Hong Kong stock market, accounting for nearly 30% of the average daily turnover of Hong Kong stocks. Maggie Mak, Head of Financial Products Trading Department and Director of Research Department at Wing Fung Financial Group (Asia), believes that the inflow of Northbound flows will expand the investor base of the REITs market, increase secondary market liquidity, narrow the discounts on some high-quality REITs, align valuations with the fundamentals, and thus restore market confidence. Yolanda Ng, International Securities Strategy Analyst at Everbright Securities, also points out that the improvement in liquidity and valuations will broaden the financing channels for REITs, which in turn will support their substantive business expansion. Maggie Mak believes that regulatory agencies will carefully consider setting more appropriate specific thresholds for REITs, such as using assets under management (AUM) as a major indicator, adopting more flexible standards to enable more REITs that comply with fundamentals to be included, thus achieving a balance between risk and market development. As for the most anticipated implementation schedule, Maggie Mak says that although the policy direction is quite clear and relevant technical and institutional preparations are underway, the exact official implementation date still awaits the final announcement by regulators in both regions. She tends to believe that there may be an opportunity to first disclose specific implementation details and a list of qualified REITs in the short term, allowing the market sufficient time to prepare and digest before officially launching trading.